Banks and mortgages

Major banks in Australia are making $450 a year more from each average home mortgage today than before the global financial crisis. The raised margin of bank funding costs reflects reduced competition as the major banks buy smaller competitors and non-bank lenders exit the home mortgage market. However Westpac spokesman David Lording said its home loans margins had been "contracting for many years".

St. George takeover

St. George Bank agreed to an 18.6 billion dollar takeover offer from Westpac Banking that would create Australia's biggest bank and be one of the country's largest corporate deals. In a joint statement Westpac is offering 1.31 of its own shares for each St. George Bank share. The combined group would have close to 10 million customers, a 25 percent share of Australia's home loan market and would be the nation's biggest wealth advice provider with funds under administration of 108 billion Australian dollars ($102 billion), Westpac said.

CFD advantage

CFDs are convenient for the stock market (if used under 10 weeks, which is estimated point where CFD financing charge exceeds financing charge for stocks) while futures are preferred by professionals for indexes and interest rates trading. Increased flexibility and leverage are the main advantages of CFDs over more conventional forms of margin trading (like stocks), although with futures there is usually enough leverage available (typically 20:1, but can be as high as 70:1). All forms of margin trading involve financing charges (with the exception of the Spot Foreign Exchange market), although in the case of CFDs and futures contracts these are already embedded in the price of the instrument. CFD-related hedging is estimated to account for more than 25% of the volume on the London Stock Exchange, a fact which corroborates the view that CFDs are recognised as very competitive (and are subsequently widely used) for profitable trading.

Economic conditions

Australian financial environment remains stable. The Australian economy is continuing to grow at a strong pace, with household and business balance sheets, overall, being in good shape. The share of households experiencing financial difficulties has increased over recent years, largely reflecting the much wider availability of credit over the past decade. Households are benefiting from strong income growth and low unemployment, with household wealth rising solidly recently. While there are some areas of stress, particularly in western Sydney, most households are reasonably positive about their personal finances. Business balance sheets also remain in good shape, with debt-servicing ratios rates remaining at low levels.

The Rise of Private Equity

The sharp rise in the number of private equity deals has prompted the Reserve Bank of Australia (RBA) to warn about the potential threats that leveraged buyouts pose to the nation's economic stability. Private equity deals in Australia totalled $27 billion in 2006, $12 billion above the previous five-year average. The RBA warned that as leveraged buyouts usually increased a company's debt ratio, it became more vulnerable to changes in economic conditions. However, the bank noted that the surge in activity was not currently endangering the continuing expansion of the economy.

ResOnline shares sold

Tony Smith the founder of Stella Resorts Group (formerly BreakFree Resorts and Holidays) has set up the online accommodation distribution and marketing with a new company called Roamfree.com that has bought ResOnline and owns equity in hundreds of small destination websites. Through the acquisition of ResOnline, and other strategic purchases and alignments, roamfree.com will take an advantage of the market that has developed over the last years for consumers, agents and affiliates searching and purchasing on-line inventory.
Stella Resorts Group was sold into MFS Limited in February 2005. As a part of MFS, Stella Resorts Group today is worth $550 million. IPO investors who invested at $1.00 per share have seen their shares grow to $12.60 each today (based on the stock market price of $4.20 at close of trade 15th August 2006).

Hitwise Online Reports

Hitwise, which publishes online competitive intelligence reports on Internet trends, had opened some of the online data centers rich with information. Some of the information available includes the top industry search terms, top 25 Web sites and more.
http://www.hitwise.com/datacenter

HSBC Stockbroking Sale

HSBC has announced that its online broking business is for sale. HSBC Stockbroking which has about 70,000 customers, including 30,000 from St George bank. HSBC Stockbroking is the fifth largest online broker but has low profitability due to a lack of scale.

ASX Trades Increase

Twenty five million trades have been made on the ASX in 2005, up 34 per cent on 2004. More people than ever before were trading using online brokers such as market leader CommSec which accounted for 15 per cent of all trades on the Australian exchange. NAB has recently upgraded its online broking service, while Westpac is planning to introduce options trading this year. Market newcomer Trader Dealer offers a flat fee of $33 for trades of up to $1 million.

Flight Centre Crash (FLT)

Flight Centre Ltd stock price has crashed over the past week after comments at the company's Annual General Meeting on 27th October that the company is not meeting profit growth targets year to date and is unable to provide earnings guidance at this point in time. Flight Centre's share price was $14.25 the day before the AGM and is trading now at $10.50 per share.